JUDGMENT
V.K. Agrawal, Member (T)
1. In this Appeal filed by M/s. Recron Synthetics Ltd., the issues involved are whether they are eligible to the Modvat credit of the duty paid on capital goods financed by the Finance Company and whether the show cause notice issued for denying the Modvat credit is time barred.
2. Shri B.L. Narsimhan, learned Advocate, submitted that the Appellants had procured capital goods by entering into lease agreement with the financial institutions namely M/s. HDFC Ltd. and M/s. Sundaran Finance Ltd.; that HDFC only financed the cost of the capital goods and did not finance the Central Excise duty payable on such capital goods; that M/s. Sundaram Finance Ltd. financed the entire cost of the capital goods including the duty payable on such capital goods; that the Commissioner under the impugned Order has disallowed the Modvat credit on the ground that the Appellants had not submitted the copy of agreement or requisite Certificate of the Finance Company before availing the Modvat credit of the duty paid on the capital goods; that the Commissioner has also given a specific finding that the certificate issue by the Finance Company did not relate to the invoice on the strength of which Modvat credit has been availed of by them. The learned Advocate, further, submitted that the entire demand is time barred as the Modvat credit was availed by them during April 1996 to July 1996 and March 1997 to July 1997 after filing the necessary declarations; that they have been submitting the invoices on the strength of which Modvat credit had been availed of alongwith the RT 12 returns to the Department; that these invoices clearly show the name of the Finance Company which has financed the capital goods as well as the name of the Appellants; that these invoices have been duly defaced by the Range Officers after verification; that thus the entire fact of availment of Modvat credit on the capital goods purchased under lease agreement was within the knowledge of the Department and show cause notice issued on 2.3.01 is clearly time barred. He relied upon the decision of the Tribunal in the case of German Remedies ltd. v. CCE, Goa, 2002 (144) ELT 606 (Tri) wherein it has been held that the extended period of limitation is not invokable as the Appellants on their part had furnished the invoices to the Department alongwith the RT 12 returns and these invoices clearly indicated that the goods were on account of M/s. Madaus who had provided the capital goods. Reliance has also been placed on the decision in the case of CCE, Meerut v. Bhushan Steel and Strips Ltd., Final Order No. 381-82/2003 NB(C) dated 17.1.03 and M/s. Diesel Locomotive Works v. CCE, Allahabad Final Order No. A-354/2003 dated 23.6.03 wherein the demand was held to be time barred on the ground that the assessee had filed RT Returns alongwith the statutory records.
3. On merit, learned Advocate, submitted that the credit of the duty was availed on the strength of valid duty paying documents; that further, there is no dispute regarding the actual receipt of the capital goods and its use in the manufacture of dutiable finished products; that non-furnishing of the agreement/Certificate is only procedural lapse in nature, for which reason the credit cannot be disallowed; that in case of the goods financed by the HDFC duty was paid by the Appellants and as per the provisions of Rule 57R(3) the agreement is not to be produced as HDFC has not financed the duty portion of the capital goods; that it is not the requirement of the Rule that the Agreement should be produced before availing the credit; that in respect of capital goods financed by M/s. Sundarn Finance Ltd., they have submitted the Certificate as required under Rule 57R(3); that the show cause notice was issued proposing to deny the credit on the ground that they had not produced the Agreement and the Certificate; that they had produced the copies of the same to the Department; that the Commissioner however, has confirmed the demand on the ground that the Certificate issued does not relate to the invoices under which they had availed the credit and the impugned Order has travelled beyond the show ca use notice. He further, submitted that the Certificate indicated the commercial invoices relating to the purchase of the capital goods; that these commercial invoices indicate the details of the invoices issued under Rule 52A of the Central Excise Rules/1944 and thus the finding of the Commissioner that the Certificate did not relate to the invoices under which credit was availed is incorrect. The learned Advocate also mentioned that a correlation of the Commissioner’s notice with invoice issued under Rule 52, was submitted to the Commissioner.
4. Countering the argument, Ms. Charu Baranwal, learned Senior Departmental Representative submitted that the appellants have not submitted the agreement and/or Certificate to the Department; that it is the requirement under Rule 57R(3); that the credit of the specified duty paid for the capital goods shall be allowed to a manufacturer if the capital goods are, acquired by the manufacturer only on lease, hire purchase or on loan agreement from the financing Company subject to the condition that the manufacturer who has entered into a financial agreement shall produce the copy of the agreement entered into by him with the financial Company in cases where the Finance Company is financing all costs of the capital goods excluding the duty; that in respect of Finance Company financing the cost of the capital goods including the duty, the manufacturer shall produce the Certificate from the financing company to the effect that duty has been paid by the manufacturer to such financing Company prior to payment of first instalment of repayment of loan alongwith the copy of the Agreement; that as this lease agreement and Certificate have not been produced, there was suppression of facts from the Department and as such larger period of limitation is invocable. She, further, submitted that in reply to the show cause notice there is no mention about the Reconciliation Statement; that the matter, therefore, may be remanded to the Adjudicating Authority to look into the reconciliation statement.
5. We have considered the submissions of both the sides. It has not been denied by the Revenue that the Appellants have submitted invoices for the purchase of the capital goods which have been financed by M/s. HDFC Ltd. and M/s. Sundaram Finance Ltd. Sample of such invoices was also shown by the learned Advocate during hearing. The invoices clearly mention the name of the Financing Company and the Appellants. It is thus evident that the Department was not kept in dark about the fact that the capital goods in respect of which Modvat credit had been availed of by the Appellants were financed by the Financing Company. It is settled law that when the RT12 returns have been filed alongwith the invoice; the Department cannot allege suppression of facts. It has also been shown by the learned Advocate that the invoices have been duly defaced by the Range Officer in token of authenticating the Modvat credit availed of by them. In similar facts and circumstances, the Tribunal has held in the case of German Remedies (supra) that the extended period of limitation is not invockable. Similar views have been expressed in other decisions relied upon by the learned Advocate. As per provisions of Rule 57U(2) of Central Excise Rules, 1944, the extended period can be invoked only when the credit of duty Under Rule 57Q has been taken on account of fraud, wilful mis-statement, suppression of facts, etc. As there is no suppression of facts, as RT 12 Return alongwith invoice were submitted, the demand is hit by time limit specified under Rule 57U. We, therefore, set aside the impugned Order on the aspect of time bar itself without going into the merits of the matter. The Appeal is thus allowed.